We develop a systematic theory of multiparticle excitations in strongly interacting Fermi systems. Our work is the generalization of the time-honored work by Jackson, Feenberg, and Campbell for bosons, that provides, in its most advanced implementation, quantitative predictions for the dynamic structure function in the whole experimentally accessible energy/momentum regime. Our view is that the same physical effects, namely, fluctuations of the wave function at an atomic length scale are responsible for the correct energetics of the excitations in both Bose and Fermi fluids. Besides a comprehensive derivation of the fermion version of the theory and discussion of the approximations made, we present results for homogeneous 3 He and electrons in three dimensions. We find indeed a significant lowering of the zero-sound mode in 3 He and a broadening of the collective mode due to the coupling to two-particle-two-hole excitations in good agreement with experiments. The most visible effect in electronic systems is the appearance of a "double-plasmon" excitation.